Even as a slowdown in the larger mass car market led the overall passenger vehicle demand to dip 6% to 25 lakh units in fiscal 2013-14, sale of new luxury cars went up about 25% to 35,000 units in the fiscal. With an increased mass of luxury cars available for the second-hand market, sales of used luxury cars, however, climbed a mammoth 60% in the fiscal to about 30,000 units.
Eberhard Kern, MD & CEO at Mercedes-Benz India, told FE that with the mass car segment for new cars under pressure, more and more customers are opting for used cars rather than new cars, which is finally leading to the overall used car market to outpace the new car growth. For Mercedes-Benz, one of the first luxury car brands to drive into India, used car sales have grown 42% in the first half of 2014.
We have noticed that we have a mixed customer profile in pre-owned cars, unlike new cars. With all the luxury carmakers now present in the important pre-owned car business, the segment is getting more organised and expected to have significant presence in the used car segment. The overall used car market is growing at a CAGR of about 25%. The luxury segments share in the overall used car market is growing steadily and the potential growth prospect only excites us more, he added.
What works in the favour of used luxury cars versus mass segment used cars is that used luxury cars usually offer much better value because the prices are sharply lower than similar new models a two-year-old BMW 3 Series can be bought for about `22 lakh, while a fresh one will set you back by `34 lakh.
Moreover, because of the use of better materials and high build quality, luxury cars last longer and also tend to have clocked fewer kilometres. The great part is that most players like BMW, Mercedes-Benz and Audi have their in-house used car arms, which offer hassle-free maintenance. Vinay Sanghi, founder CEO of Cartrade.com, a networking platform for over 1,200 used car dealers, said, Luxury cars owners change their vehicles in three years, leading to a large supply of these cars in the second-hand market. Used luxury car market is expected to grow at 30-40% a year. This is pretty significant as India is already on the global map for most luxury brands.
With rising income levels and increased aspirations from a demographically young population boosting demand for luxury brands, expect a clutch of new entrants in the market soon. Toyotas Lexus and Nissans Infiniti are both said to be considering an entry into
India at the earliest, while General Motors Cadillac has also studied the countrys market intensively.